AN investment agreement for the long-delayed Oyu Tolgoi copper-gold mine project in Mongolia will likely be finalised this month when the matter is discussed in that nation’s parliament.
The project, spearheaded by Canada’s Ivanhoe Mines and Rio Tinto, has been on hold for the past four years due to partisan parliamentary bickering, but the current mining-friendly Government hopes the mine — the largest resource of its type in the world — can move to the development stage as soon as possible.
The delay in finalising the investment agreement had resulted in lost opportunities, Mongolian Deputy Prime Minister M. Enkbold said yesterday.
“We, both our people and the parliament, understand what is the cost of the delay,” he told Dow Jones Newswires.
Mongolia in 2006 said it would seek a stake of up to 50percent in strategic mining projects such as Oyu Tolgoi, and that it would impose a windfall tax on company profits from copper and gold production.
There have recently been indications that the Government will be flexible on the 50percent rule for Oyu Tolgoi and that it might remove the windfall tax for the project.
Oyu Tolgoi is expected to produce an average of 440,000 metric tons of copper and 320,000 troy ounces of gold a year over the life of the project.
Rio Tinto holds a minority stake in Ivanhoe Mines, the project’s owner. Rio made an initial $US303 million investment in the project in 2006 and has an option to increase its investment to $US2.3 billion ($3.4 billion) for a 46.65 per cent stake.
The Mongolian Government was also exploring various options towards privatising the Tavan Tolgoi coal mine — a huge thermal and coking coal project in the Gobi Desert — with a broad range of potential investors, including companies from China, South Korea, Japan and the US, Mr Enkbold said.